September 7, 2011

The Leahy-Smith America Invents Act Marches Toward Becoming Law

by the Intellectual Property Department

The Senate is expected to vote soon on the House version of the Leahy-Smith America Invents Act, designed to reform patent laws and patent litigation. One of the biggest changes would be a shift from the first-to-invent system to a first-inventor-to-file system, in part to eliminate disputes over who is the first inventor and to align U.S. law with other countries’.

Today, the Senate plans to consider H.R. 1249; last night, it approved a cloture motion, 93-5. Senate debate will be limited to 30 hours, after which the bill could proceed to a vote. No senator will be allowed to speak on the legislation for more than an hour, preventing a filibuster. (Click here to read our earlier legal alert on the Senate and House versions of the bill.)

If the Senate approves the bill, once it undergoes any reconciliation with the House, the President is expected to sign it into law (enactment date). Parts of the House bill that would be effective upon signing include the following:

A defense to infringement, a prior commercial use defense, will be available when infringement is based upon patents issued on or after the date of enactment. (Sec. 5, which amends 35 U.S.C. § 273) The commercial use must occur at least one year before the effective filing date of the claimed invention or the date the invention was disclosed to the public. A premarketing regulatory review period and use of subject matter by a nonprofit laboratory research institution is considered commercial use.

The best mode defense in actions involving the validity or infringement of a patent will no longer be available in proceedings commenced on or after the date of enactment. The failure to disclose the best mode shall not be the basis for cancellation, invalidity, or unenforceability of a claim. (Sec. 15, which amends 35 U.S.C. § 282)

Patented articles may be marked using “virtual marking,” in which the article contains Patent or pat, along with an Internet address that associates the patented article with the patent number. This change will apply to any case that is pending on the enactment date and those filed after that date. (Sec. 16(a), which amends 35 U.S.C. § 287(a))

Only a person who has suffered a competitive injury as result of false marking of a product may sue for false marking, and the relief provided is damages to compensate for the injury. It will no longer be a violation if a product is marked with a patent that has expired. This change will apply to any case that is pending on the enactment date and those filed after that date. (Sec. 16(B), which amends 35 U.S.C. § 292(a))

Parties that are accused infringers may be joined in only one action as defendants or have consolidated actions for trial if the right to relief is asserted against the parties jointly or severally, or the right to relief arises out of the same occurrences and questions of fact are common to all defendants. Accused infringers may not be joined as defendants based solely on allegations that each has infringed the patent(s) at issue. This change will apply to any case that is filed on the enactment date and those filed after that date. (Sec. 19(D), which adds 35 U.S.C. § 299)

No patent may issue with claims directed to or encompassing a human organism. This change will apply to any patent application that is pending on, or filed on or after, the enactment date. This section will not affect the validity of any patent issued on an application that was not pending on the enactment date. (Sec. 33)

Any strategy for reducing, avoiding, or deferring tax liability, except for inventions that fall within the exclusions, will be considered to be within the prior art. Exclusions include technology used for preparing tax returns or filings or that is a method for financial management that is severable from any tax strategy. This change will apply to any patent application that is pending on, filed on, or filed after the enactment date. (Sec. 14)

Litigation against the U.S. Patent and Trademark Office (USPTO) will take place in the Eastern District of Virginia, not at the U.S. District Court for the District of Columbia. This change will apply to any civil action that is commenced on or after the enactment date. (Sec. 9)

Calculations of the 60-day period for Patent Term Extension are amended. If permission received for a product is transmitted after 4:30 p.m. Eastern Time on a business day, the product will be deemed to have received the permission on the next business day. This change will apply to any application for extension of patent term that is pending on, filed on, or filed after the enactment date. (Sec. 37)

Other patent law changes take effect at differing times after enactment. The shift from the first-to-invent system to first-inventor-to-file system will take place 18 months after enactment and require USPTO rulemaking activity, as will other aspects of the new law. One of the more quickly felt changes would be a 15 percent surcharge on U.S. Patent and Trademark Office fees, which would go into effect 10 days after enactment.

Ballard Spahr is monitoring the progress of Leahy-Smith and will keep you up to date.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.